Assignment:
The following excerpt deals with Nordstrom's cost-cutting efforts. Nordstrom's Inc., a retailing-industry laggard in profits, has been undergoing an effort to cut costs. But can the department store chain do that while maintaining its famously obsessive level of customer service? "The biggest challenge is to keep the culture in the organization while making the necessary changes for the new millennium," says Jennifer Black, president and analyst at Black & Co. in Portland, Oregon. The good news is that Nordstrom's lags so far behind the industry's most efficient and profitable department store operators that it can cut a lot of costs without gutting the sales staff. "There is so much at this company that hasn't been done," Black says. "They've only skimmed the surface." For instance, May Department Stores Co., based in St. Louis, boasts a 12.5% operating margin, while Nordstrom's was among retailing's lowest, at 5.6% for 1998. Nordstrom's certainly has opportunity for improvement. Its sales per square foot of store space, at $382 for 1998, are the envy of the industry. May's sales per square foot were just $201. But inefficient operations have prevented Nordstrom's from boosting its bottom line, despite its higher sales. Becoming efficient requires Nordstrom's family, which owns a controlling 35 percent stake in the company, to embrace change at what has been an insular operation. So far, the family is talking the talk. "Nothing is sacred," says 36-year-old William Nordstrom.
a. What is Nordstrom's strategy as implied by the discussion in the news article?
b. Given your answer to part (a), discuss how, as a paid consultant to Nordstrom's, you would go about developing a plan to recommend cost management changes at the company.